Comtex SmarTrend(R) Morning Call -- November 21, 2008

Nov 21, 2008 (SmarTrend via COMTEX) -- VZ | Quote | Chart | News | PowerRating -- A free-falling stock market, driven by recession fears, not only caused the DJIA to break through its prior recent low of 7,882, but came close to testing the 2002 dotcom bubble-bust low of 7,400. Just about every SmarTrend(R) indicator is deep in its oversold territory, and a bounce up is expected this morning.

The question is whether the corrective bounce up expected this morning will be strong enough to kick off the anticipated near-term uptrend, which has been postponed for several days as a result of the wholesale flight from equities that is yet to slow down. Yesterday enormous stock-selling pressure was demonstrated by a rare fourth day in a row of hyper-polarized to the negative daily SmarTrend(R) utprends to downtrends, which registered 3:309. This in turn delayed the rise expected by the IBDI, and caused the TrendRatio to sink further. Thus, the intermediate-term trend, like the other three major trends driving the market indices, continues to wallow in its oversold cellar. It remains in a state from which a rally is expected, with a commencement likely at any time. However, until an intermediate-term rally commences there is little possibility the long-term downtrend will find a bottom.

All four near-term trend indicators are deep in their oversold zones; they have been there for several days, and based on historical experience including the 2002 era, suggests these indicators are due for a multi-day rally. Waiting on this near-term rally for the last two days has proved to be a wise exercise for bottom fishers, and reinforces the notion that the time to buy long stocks is after the near-term rally manifests itself. That could be today when the market indices are expected to bounce up, or it may not happen until next week. At some point jittery nerves will calm down and bargain hunters will provide the impetus to stimulate stock buying. Until that happens, the wise investor will watch and wait.

The trade-term trend also is wallowing deep in its oversold zone, and is expected to enjoy a compensatory jump up this morning. Whether such a bounce will ignite a multi-day rally is tied, in part, to whether the DJIA can climb back up over 8,000 and stay there. Much attention will now shift to the question of Citigroup's (NYSE:C) value, and whether the sum of the parts sold would be greater than the currently low stock price. If this turns out to be true, it will demonstrate to stock buyers that there is more value in equities than the free-falling market indices reflect. There are other economic reports discussed below which may also impact the collective consensus, which is hungry for reasons to reverse pessimism. The stocks changing trends recently may be reviewed by clicking on http://www.mysmartrend.com

Equity markets raced toward week's end like a pack of scalded dogs yesterday, with tails tucked beneath them, hounded by an auto rescue stalemate, more financial balance sheet worries, employment declines, and nothing much on the other side of the ledger to offset all the negatives. The DJIA, once again fading fast in the final hour, closed off 5.6%, with all components but General Motors (NYSE:GM) ending down on the day. Nasdaq shares ended off 5.1%. The S&P 500 sank to an eleven-year low, down 6.7%, with 95% of its components in the red, sending one-third of the index to market caps of under $4 billion, according to BGC Partners, the index' minimum value for membership. Investors hunkered down in perceived safety instruments at any price, taking the 30-year Treasury yield to a record low of 3.57% and the 2-year to a yield below 1%, while junk bond yields and yields in commercial real estate continued to soar. The greenback also responded to safety cries as well as upped odds on interest rate cuts, and jumped to a 17-month high on the Swiss franc, and approached a 6-year high against sterling. Volatility continued to ratchet higher, as the CBOE Vix shot up 8.9% to 80.86. On the NYSE, decliners far outpaced advancers by 13 to 1, as volume picked up to 2.2 billion. Although "capitulation" is often better seen looking over one's shoulder, the white flags were scattered on the field, and surrender seemed near at hand.

Disagreement over the source of funds for an auto rescue sent US auto execs home empty-handed except for the bone of entreaty to return next month with a better rescue plan. Earlier up as much as 30%, General Motors (NYSE:GM) still managed to close 3.2% higher on the session. However, concerns about Citigroup's (NYSE:C) credit exposure erased one-quarter of the firm's market capitalization, even after Prince Alwaleed announced plans to invest $250 million in the company, upping his stake from four to five percent. Financials skidded lower, down 10.7%, despite Treasury Secretary Paulson's comments averring confidence in the companies, a continuum of decline begun last week after Paulson announced TARP would no longer assume the purchase of banks' toxic mortgage assets. JP Morgan (NYSE:JPM) shares fell 17.9% and Bank of America (NYSE:BAC) 13.9%.

The energy sector posted the largest percentage loss, down 12.4%, as US crude prices plunged 7.5%, or $4, to $49.62, the lowest since May 2005 and down 48% year-to-date. Goldman Sachs (NYSE:GS), the firm which speculated prices were likely to spike to $200 per barrel, cut 2009 projections to $80 per barrel from $86. Slowing global demand send material stocks lower, down 3.9%, with the DJIA's Alcoa (NYSE:AA) closing off 16.1%.

Economic reports continued to paint bleak pictures of the economic landscape. Weekly initial jobless filings rose to a 16-year high last week of 542K, 39K more than expected and 27K higher than a week ago. US Leading Indicators, a glimpse of future business activity, dropped by a more-than-expected 0.8% from September's revised 0.1% increase. And the Philly Fed diffusion index of current regional business activity sank to minus 39.3 in November, better than the minus 35 expected, but down from October's minus 37.5 post.

Winter had not dropped a final pall on stocks, however, and US stock market futures printed sharply higher going into Friday's open, with traders rethinking their doomsday scenarios for financials, and eying irresistible valuation levels. In Europe shares were sharply higher on gains in battered material and financial shares, following reports Citigroup's (NYSE:C) board was meeting today to weigh strategic options, which include the sale of all or part of the company. Asian shares gained with the Nikkei up 2.7%; the South Korean Kospi up 3.2%; and the Hong Kong Hang Seng up 2.9%. After the market close yesterday, Dell (NASDAQ:DELL) reported a better-than-expected third quarter of 37 cents per share despite its 3.1% drop in revenues. Gap (NYSE:GPS) topped quarterly projections by a penny at 35 cents per share despite its revenue decline of 7.6%, and reaffirmed its guidance for the year of $1.30-$1.35, inline with Wall Street projections. Fannie Mae (NYSE:FNM) and Freddie Mac (NYSE:FRM) advised they will suspend foreclosures while loan modifications are made.

Today's calendar is devoid of economic events of import, but includes several Fed speakers including Richmond Fed President Lacker (8:15 AM ET), Chicago Fed President Evans (12:40 PM ET), and Philadelphia President Plosser (8:30 AM ET). Earnings reports are slated for Ann Taylor (NYSE:ANN), H.J. Heinz (NYSE:HNZ) and J.M. Smucker (NYSE:SJM).

In the corporate corner, Bank of NY Mellon (NYSE:BK) announced plans to cut 1800 jobs, or about 4% of its workforce... Foot Locker (NYSE:FL) announced third quarter profits of 18 cents ex-items versus last year's 22 cent loss, but cut 2008 guidance to 50-63 cents from its prior 70-85 cents projection, and below Street estimates of 82 cents... Inventory controls sent Gap's (NYSE:GPS) third quarter to a better-than-expected 35 cents, topping consensus projections by one penny as revenues fell 7.6% to $3.56 billion. The firm reaffirmed its inline guidance for the year of $1.30-$1.33... Grand Canyon (NASDAQ:LOPE) marked the first US public offering in more than three months Thursday, raising $126 million. The education firm raised only half of what was originally planned, and closed fractionally below its $12 offering price... KeyCorp (NYSE:KEY) slashed its dividend by two-thirds to 6.25 cents from 18.75 cents... Nordstrom (NYSE:JWN) ratings were cut to negative from stable by Moody's (NYSE:MCO) following a decline in third quarter same-store-sales... Salesforce.com (NYSE:CRM) reported inline third quarter results of 8 cents on revenues of $276.5 million versus 5 cents a year ago. The company expects fourth quarter results of 6-7 cents on $284-$295 in revenues, off Street estimates of 8 cents...Heinz (NYSE:HNZ) reported fiscal second quarter earnings of 87 cents, up from Street estimates of 76 cents and last year's 71 cents. The firm reaffirmed sales growth targets for fiscal 2009 of more than 6% and earnings of $2.87-$2.91... More in-home meals permitted J.M. Smucker (NYSE:SJM) earnings to top year ago results and analyst estimates, printing at $1.02 ex-items versus 87 cents a year ago and Street projections of $1.00. For the year the company expects results of $3.45-$3.50... Verizon's (NYSE:VZ) much-heralded launch on its first touchscreen smartphone, Research in Motion's (NASDAQ:RIMM) Blackberry Storm is expected today aimed at Apple's (NASDAQ:AAPL) successful iPhone...

By Chip Brian, Editor-in-Chief, Comtex news Network

www.Comtex.com -- editor@mysmartrend.com

The following equities mentioned above include:

Comtex SmarTrend Alert ---------------------------------------------- Ticker Last Close Trend Direction Trend Price Trend Date ---------------------------------------------------------------------- AA 6.85 Downtrend 38.35 6/20/2008 AAPL 80.49 Downtrend 91.79 11/12/2008 ANN 5.35 Downtrend 23.28 9/17/2008 BAC 11.25 Downtrend 28.62 10/7/2008 BK 24.36 Uptrend 26.50 9/29/2008 C 4.71 Downtrend 14.52 10/21/2008 DELL 9.81 Downtrend 20.82 9/3/2008 FL 7.63 Downtrend 11.44 11/13/2008 FNM 0.33 Downtrend 0.63 10/24/2008 FRE 0.49 Uptrend 1.32 9/23/2008 GM 2.97 Downtrend 9.82 9/26/2008 GPS 9.51 Downtrend 16.32 10/6/2008 GS 52.00 Downtrend 108.86 10/23/2008 HNZ 38.02 Downtrend 40.35 11/12/2008 JPM 23.38 Downtrend 35.40 11/12/2008 KEY 6.91 Downtrend 9.56 11/13/2008 JWN 8.40 Downtrend 29.19 9/26/2008 MCO 15.63 Downtrend 20.73 11/11/2008 RIMM 41.52 Downtrend 46.28 11/11/2008 SJM 38.25 Downtrend 50.72 9/18/2008 CRM 22.83 Downtrend 27.33 11/11/2008 VZ 26.50 Downtrend 28.13 11/19/2008

INX -- S&P 500: 752 Lo: 747 Hi: 821 Change: -54.14

http://www.mysmartrend.com/images/INX20081121.jpg

INDU -- DOW JONES: 7,552 Lo: 7,507 Hi: 8,187 Change: -444.99

http://www.mysmartrend.com/images/INDU20081121.jpg

QQQQ -- NASDAQ: 1,316 Lo: 1,315 Hi: 1,414 Change: -70.30

http://www.mysmartrend.com/images/QQQQ20081121.jpg

This report is divided into three sections. The first deals with our 5 proprietary market indicators, the second section examines important economic and business happenings which are expected to affect U.S. Stock market movements and the third section describes specific company announcement and earnings releases. Experience demonstrates that when these 5 indicators reach extremes they can shortly be expected to change direction and move in the opposite direction. When such happens in all or most of the 5 indicators, on or about the same time, followed by a move from below an extreme (oversold) to above that extreme (or vice versa for overbought), a change in market direction is very probable. The near term market moves are measured to identify the best possible returns for traders/investors. Daily price/volume examinations provide the best data upon which to base such forecasts. In this report though, intraday indicators are examined to improve the point of entry timing for the expected move.

Comtex News Network, Inc. is not a registered investment advisor and does not provide investment advice. Investors bear complete responsibility for their own investment research and decisions and should seek the advice of a qualified investment professional prior to making investment decisions. SmarTrend is a registered trademark of Comtex News Network, Inc. Copyright, Comtex News Network, Inc. 2008

Comtex News Network, Inc. ("Comtex") obtains information from sources deemed to be reliable; however, Comtex does not guarantee the accuracy of any of the information or commentary provided. Comtex makes no warranties, expressed or implied, as to the fitness of the information for any purpose, or to results obtained by individuals using the information. In no event shall Comtex be liable for direct, indirect, or incidental damages resulting from the use of the information. Comtex shall be indemnified and held harmless from any actions, claims, proceedings, or liabilities with respect to the information and its use. Comtex does not make specific trading recommendations or provide individualized market advice. The information contained in the Morning Call product is provided as an information service only.

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